The U.S. Export-Import Bank approved a loan guarantee of $500 million for a Bahrain oil project despite opposition from Democrats noting the move would compromise the Biden administration's hard line on climate change.
Last month, the Export-Import Bank voted to notify Congress that it plans to underwrite a loan of more than $100 million to the borrower, Bahrain's state company Bapco Energies. The money would be used to drill more than 400 oil and gas wells in the Middle Eastern country. The project will see the involvement of SLB, the world's biggest oilfield services provider.
The plan to back fossil fuel expansion, however, runs counter the U.S. federal government's climate pledge to stop financing oil and gas projects, hence the opposition from the Democratic Party, which argued that EXIM's decision would negatively affect the credibility of the United States on climate change related matters.
Following the decision to provide the loan guarantee, one vocal opponent, Senator Jeff Merkley, called the Export-Import Bank "a rogue agency". EXIM's president, Reta Jo Lewis said the loan will help Bahrain improve the work of its grid and invest in energy efficiency and solar power.
Climate change campaigners were also unhappy about the bank's decision.
"This approval signals another setback for Biden's climate commitments and cements the United States yet again as the worst of the laggard countries in violation of the promise to end international public finance for fossil fuels," Oil Change International export finance climate strategist Nina Pusic said, as quoted by Bloomberg.
Prior to the vote, other environmentalist organizations also slammed EXIM for its work with the oil and gas industry, noting it had provided loan guarantees to a lot of foreign projects over the past three years despite the administration's anti-oil and gas energy policies. One organization claimed the bank had even violated a presidential executive order last year by providing close to $1 billion for oil and gas projects overseas.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More